There is no cap. If you have no other income, you could potentially make a $5 million profit on selling an investment home and pay 0% LTCG rate (ie not a single dollar to the Fed). But you will still have normal tax rates most likely to the state. Turbotax just 99% of the time doesn't utilize the capital gain tax worksheet and instead includes this as ordinary income. I know because its doing it to me this year. I've been working on this for weeks and cant seem to get around it.
